Tag Archives: Metropolitan Council

Twin Cities Metro Area Household Types, Homeowneship Rate, and Household Size

Last week I was in a conversation with a local builder about what kind of housing will be needed going forward.  Many factors influence the type of housing that needs to be added to a marketplace, including Household size, household types, income,  and jobs.

I have begun digging into some general questions, starting out on our Regional area then moving them into the specific location we intend to add housing units in.

This is general enough information to share about our region.  This data is available at the Metropolitan Council, which is pulled from the US Census and ACS reports.

The Twin Cities Household Size seems to have come back up to 2.5 in the latest 2010 Census.  (notice how accurate the information is, 2009 has 2 sets of information from the ACS – which don’t match up but are in the ballpark of each other.)

Since this information was available I was curious to see the Homeownership Rate for the Twin Cities 7 County Metro Area.  I wanted to see how the housing market bubble impacted our regional homeownership, it will also show us if more rental units are needed or owner occupied units needed.

The following is a pretty important factor to consider when adding product to the marketplace.  The Household Type.  There has been a lot of talk about the households changing dramatically, that there will no longer be need for the large homes because nobody is having kids anymore.  Judging by these stats, there is some truth to that – but not as dramatic as those statements claim to be.  We are seeing fewer children in the household makeups, but I would suspect when we get through this recession/recovery we will see that bounce right back up.  I suspect many younger couples are waiting to gain employment before starting a family… (hence our “pent-up demand”).

A view showing percentage of 2000 Census vs the 2010 Census.

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Twin Cities Population decline, by County

My last post on the Twin Cities Population decline raised some interest and questions.

I took the Metropolitan Council’s data and charted the population loss by County.  We know the 7 County area is losing population, but where is the majority of the loss coming from?

Population Change 2009-2010 by County

The Population loss by the numbers: Hennepin and Ramsey County are by far leading the 7 County Metro area in population loss in numbers.  These 2 counties also hold the largest population.
Broken down by percent of population lost between 2009 and 2010 should show a more fair comparison.
Ramsey is leading the percentage loss, while Hennepin and Anoka are a close 2nd and 3rd.
Look at Wright County bucking the trend by gaining population!
Population is an important factor, but from a real estate market perspective we are more interested in Households.  How many housing units are going to be needed to supply the household growth.
Below shows us the loss of Households by County.  Again Ramsey and Hennepin County lead in the Household loss.
Household Change 2009 – 2010

 Judging by Washington County’s population growth and households shrinking, it appears as if people are moving in together during these economic times.

I would assume this is true in the other counties too.
What can be done to get the population and household to head in the right direction?
I know we have a fabulous climate that everyone is wanting to move to… but what else do we have to offer?
THIS is why I suspect we lost the population.  Look at the balloon of unemployment insurance claims during the same period.

 We need a healthy population and household growth to sustain a healthy real estate market.



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The Twin Cities losing Population and the impact on the housing market.

After reviewing data sets from the Metropolitan Council  and running some spreadsheets, I have come up with a couple graphs that illustrate what may be  ahead for the Twin Cities real estate market.  These are assuming Metropolitan Councils population and household forecasts are in the ballpark of what will happen.

This Chart shows the Population and the Households from 2000 to now, these we can assume are accurate figures.  The question comes into play when we look into the future.  Met Council forecasts that the 7 County Twin Cities Metro area will increase in population and households by 2020 and by 2030.  These forecasts are in putted on the chart.

Metropolitan Council figures on Population & Households 2000-2030

The graph “looks” like the Met Council is extremely optimistic on our population and household growth in the future, however if you look closer you will see the chart jumps from 1 year intervals to 10 year intervals.  There are 2 2010 figures as the data was compiled from their “forecast” and “estimates”  Their “estimates” are past tense, so they are fairly accurate.
Their  “forecast” missed the actual or “estimate” by only  80,251 households, just slightly larger than a large suburb or a 6% miscalculation.  I will cut them some slack, when that forecast was made I don’t think anyone had any idea what kind of turmoil the economy was going to be going through.  
On a side note, these are the figures that developers and home builders based their production on. Is it possible the Met Council contributed to our regional over surplused housing market by over forecasting growth?
There is also an interesting trend appearing in these charts. There is a decline of population and households between 2009 and 2010.  According to Met Councils data, the Twin Cities 7 County Metro area had a decline of 32,245 in population and 20,763 households between 2009 and 2010.  This is an alarming trend if it continues.  I will go out on a limb and jump to a radical conclusion that the reason for the population and household loss was due to the un-employment rate and these people moved out of the area or out of the State to seek employment.  You may have other conclusion on why you think we are losing population, which is a good topic for discussion.
If this trend continues it could do severe damage to the regional housing market.  Come to think of it, I don’t think this region has ever had a drop in population and households.
Let’s see what data is available.

Twin Cities population and households 1970-2010

The Met Council had some data going back to 1970, that is as far back as I could find data.  The data also was only in 10 year intervals up until 2000.  So it is possible there was a small decline somewhere in there and then bounced back up.  Either way, this is still an ominous sign for our region.

These future projections could be wrong if the Twin Cities 7 County region does not produce jobs.  What could impact the job growth?  Large corporations and small business moving to more tax friendly markets is a real possibility as well as the health of the  national and global economy.

Metropolitan Council Housing Units & Building Permits

If we were to assume that these projections will be in the ballpark of being accurate.  Our population growth would easily absorb the surplus inventory of housing by 2020. (hey that’s only 9 years away!)
If you look closely at the bottom of the chart you will see some small red dots with numbers above them.  That was the “housing boom” glut of new construction in the Twin Cities.
Keep in mind that the Housing Units and Building Permits represented here are for all housing types; apartments, townhomes, single family, condos, and coops.
We would likely see a need to increase the production of housing to meet future demand probably within the next few years.  The question remains on what kind of housing units will be needed.  To gauge this we will need to understand the types of employment the households will have – income to be precise.  That may range from mobile home parks to luxury homes, or may cover all types of housing and price ranges.

2009 Existing Home Sale Prices

The most recent data on Existing Home Sale Prices is from 2009.  This does not show our entire housing stock, but a good representation of the current real estate market.  It would be fairly safe to assume that these trends will continue for the foreseeable future.  This gives us a sense of “demand” by price range for the entire region. 
We do have a surplus of housing in the Twin Cities, however – if you dig a little deeper into each individual market you will discover that there is a shortage of certain types of housing. 
If these “forecasts” by the Met Council are accurate then there is hope on the horizon for the Twin Cities real estate market and the local home builders.
 If the population and household forecasts are not accurate and we continue to lose households, I am afraid we are in for a long ride…
What the housing market needs is strong job growth.


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